Taiwan's economic standstill belies Ma's pledge of growth

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Re-elected by a solid margin in January, Taiwan's president, Ma Ying-jeou, began his second term on Sunday with dismal approval ratings that may augur a difficult second term.

Fundamentally, Ma is a modern Confucian politician who has shown that this ancient political and ethical tradition is very much alive in 21st-century East Asia. Unlike 20th-century totalitarian Confucian politicians like Chiang Kai-shek and Kim Jong-il, Ma is not the heroic incarnation of the state, ruling through the force of unquestionable ethical power. Instead, he is admired for his personal integrity and incorruptibility that in Taiwanese politics distinguishes him from his corrupt predecessor Chen Shui-bian.

But Ma's popularity is declining quickly as Taiwanese increasingly believe he is cut off from reality and incompetent. His handling of the island's domestic challenges in his first term was at best ineffectual.

In 2008, Ma came to office promising that opening up to mainland China would create a 'golden decade' for Taiwan's economy. While Beijing was willing to co-operate with him in normalising relations across the strait, the millions of mainland tourists who visited Taiwan and the tiny trickle of investment into Taiwan have done little to offset the ongoing mass emigration of Taiwanese industry to the mainland.

An entire generation of Taiwanese has been educated for a knowledge economy that never materialised due to a lack of investment. Taiwan is now a post-industrial society without a post-industrial economy. Moreover, those Taiwanese who do have jobs have not had pay increases in more than a decade.

Ma is still promising that his golden decade is just around the corner, and voters clearly decided to give him another chance. But, increasingly, the hardworking Taiwanese are becoming resentful and angry that their dreams are being deferred even as construction companies race to build more luxury residential complexes in Taipei.

Ma is also facing serious challenges within his own party. Unlike Ma, who is limited to two terms, most of his party's legislators will face the voters again. That means they are becoming less willing to pass unpopular laws, such as one that would impose a capital gains tax on stock investors.

Nonetheless, Ma insisted in his inaugural address that he would stay the course and inflict the pain necessary for reform. His few comments on mainland China in the address were symptomatic of what to expect in his second term. On the one hand, he reaffirmed his China policy in terms of not doing things: no unification, no independence, no armed conflict. On the other, he congratulated himself on his adherence to the constitution by insisting, in defiance of reality, that the Republic of China is the 'one China' referred to in the 1992 consensus.

In his first term, Taiwan's dazzling opening to mainland China largely distracted the public from Ma's failed domestic policies. Nonetheless, that opening has now stalled due to the succession preoccupation on the mainland and Ma's quixotic defence of the republic. Now, public attention is focused on domestic policies.

Ma's strategy no doubt was to force through a series of unpopular reforms before his second term began. That strategy has failed badly, and Ma, who looks increasingly worn from the cares of high office, should act decisively to save his second term and secure his legacy.

The best way to make a fresh start would be to immediately pardon his predecessor Chen, whose mental and physical health is rapidly declining in prison. By showing the compassion he urges China's leaders to have for its dissidents, Ma would not only be displaying the Confucian value of being humane, but also acting to realise the plea for unity he made in his inaugural address: 'We are a family and Taiwan is home to us all.'